Executive Insights: Chris Brown's keys to successful partnerships
Brown & Riding's Chairman gives his perspective on how retail and wholesale brokers can create better working relationships.
We’ve all heard this before: “Insurance is a relationship business.” Among the most vital business relationships in the insurance value chain is the one that exists between retail brokers and wholesalers.
Chris Brown, chairman and national casualty & construction practice leader at Brown & Riding, one of the largest wholesale brokers in the U.S., knows how critical a symbiotic partnership is between retail and wholesale brokers.
Brown joined Brown & Riding in 1985 as the firm’s first Southern California marketing representative. Just five years later, in 1990, he was appointed president. Today, he helms Brown & Riding as chairman as well as a broker and leader within the company’s Construction Practice Group (CPG), a knowledgeable team of construction experts specializing in casualty, property, environmental, and professional liability.
Throughout his more than three-decade career, Brown has seen how industry changes have affected his distribution channel, particularly the ripple effects of robust merger and acquisition activity. “Retail brokers and other insurance companies are becoming larger,” Brown explains. “So one thing that has evolved in recent years is there is less of a need for using wholesalers to access certain markets.”
While this may sound like a challenge for wholesalers, Brown says it can actually be an opportunity. Market competition and pressures have helped raise professional standards within the wholesale business. At the same time, more retailers are finding that the right wholesale partnerships can add efficiency and expertise to their offerings.
But, as with any relationship, brokers on both sides of the aisle may experience a bump on the road to developing a strong partnership.
Avoiding conflicts
One of the industry’s inherent challenges impacting retail-wholesale broker relationships is something Brown refers to as a “built-in conflict of interest”: Insurance companies predominately compensate insurance brokers through commission. So, although brokers have an ethical and professional duty to represent the insurance buyer, the more the buyer pays, the more the insurance broker makes.
Naturally, this can raise questions about whether a client is getting the best possible coverage.
Additionally, some wholesale brokers have ownership stakes in other insurance distribution channels. And if a wholesale broker is also competing with its retail clients, that can cause issues. This is a characteristic that Brown & Riding has strived against by following a set of principles that put the interests of clients first: ”We want to be the ones who don’t have the conflicts and who represent the marketplace on behalf of clients,” Brown says.
Pillars of a successful relationship
For the past 20 years, Brown & Riding has implemented a sophisticated system to measure how well their brokers work with retail partners. Retail clients are randomly selected to complete an anonymous satisfaction survey on a recently completed transaction. The retailers rate their experience in thoroughness, communication, ease of doing business, how well the wholesale broker listened, and more. This process has ensured that Brown & Riding’s brokers meet the highest accountability level to client satisfaction.
From reviewing client feedback over the years, Brown has gleaned an important insight: “What I have learned from looking at the bad feedback is that retail brokers don’t understand a lot about how wholesale brokers operate, and wholesale brokers think they do.”
One particular complaint that Brown has seen repeatedly is that retailers worry about what happens when they send a submission to the wholesaler, highlighting a lack of communication between the channels.
To remedy this, Brown emphasizes two key qualities when building successful retail-wholesale broker relationships: trust and confidence. “When retail and wholesale brokers have trust and confidence in each other, then that’s a healthy relationship,” says Brown.
Wholesale brokers are not “in the quoting business,” he quips, adding that wholesalers want the opportunity to build strong relationships through meaningful conversations that help them understand the client’s needs and that emphasize the value they bring as specialists.
“As a wholesaler, you want to look for relationships with retail brokers who have good relationships with good clients; you have to look for the signs and make sure you spend your time wisely.”
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